Algonquin says U.S. storms to hit 2021 adjusted EBITDA ALGONQUIN POWER & UTILITIES CORP. PROVIDES OPERATING UPDATE ON RECENT SEVERE STORMS IN THE U.S.
Algonquin Power & Utilities Corp. is updating investors on the continuing operating impacts of the extreme winter storm conditions that have been experienced in Texas and parts of central United States. All amounts are shown in U.S. dollars, unless otherwise noted.
"First and foremost, our thoughts are with the many people whose lives have been disrupted by the extreme weather events," said Arun Banskota, president and chief executive officer of Algonquin. "Since the events began, our teams have worked tirelessly under very challenging conditions to keep our customers and communities safe, and to maintain our system reliability and resiliency. I would like to thank our employees for their unwavering commitment and teamwork, and we look forward to resuming normal operations as soon as possible."
Despite the extreme weather conditions, within the regulated services group, the company's electric, gas and water networks have performed strongly. Other than the need for short-term load shedding of a small minority of customers in line with the other utilities within the Southwest Power Pool (SPP), the regulated services group has seen strong reliability of its networks during a sustained period of increased consumption, including new winter peaks for the electricity and gas systems located in the central U.S.
The recent extreme winter weather has caused ice and freezing conditions, which have restricted electricity production at certain of the renewable energy group's Texas-based wind facilities. The company's revenue portfolio at these facilities comprise a mixture of financial hedges/swaps, long-term unit-contingent power purchase agreements and market energy settlements. The financial hedges/swaps impose an obligation to deliver energy, and, as a result of the production impacts caused by the recent weather events, the relevant facilities may be required to settle at elevated pricing in order to meet obligations. The company's No. 1 priority is to safely return the turbines back on-line as soon as weather conditions permit.
The company continues to assess the aggregate net impact of these unusual weather conditions on its business, operations, results and financial performance. Based on available information, the unfavourable financial impact of these weather events on 2021 adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA") is currently estimated to be between $45-million and $55-million, which represents approximately 5 per cent to 6 per cent of 2019 adjusted EBITDA. The company has asserted force majeure and is assessing other potential mitigating options. The company anticipates providing a further update in connection with the release of its financial results for the year ended Dec. 31, 2020, which is scheduled to occur on March 4, 2021.